A former Nepalese soldier has lost an employment tribunal case in which he accused the Ministry of Defence of racial discrimination.

Navinkumar Gauchan, from Colchester in Essex, had claimed that an "up or out" policy of discharging servicemen who were not promoted was discriminatory, as it applied only to Gurkha troops.

In its report issued on Friday, the employment tribunal panel at Bury St Edmunds in Suffolk said the policy might be "anachronistic" and should be re-examined.

However, the panel concluded it was wrong to attribute it to racial bias.

Gurkha troops are known for their distinctive uniform

At a four-day hearing in January, the former lieutenant told the tribunal his superiors wrote a bad annual report on his work with the Queen's Own Gurkha Transport Regiment.

He claimed this meant he was passed over for promotion at the Colchester-based regiment and therefore pensioned out.

Lieutenant Gauchan, who served for 21 years in the army in areas such as Thailand, Hong Kong, Korea and Kosovo, said this meant he left in "disgrace and humiliation".

He told the tribunal: "I believe the racial discrimination took place in order to gain personal interests of superior officers mainly to cover up the lapses on their duties and responsibilities.

"They know Gurkhas are loyal, honest and have a tradition to accept whatever decisions are made for them by the white officers."

'Marginal candidate'

However, the Ministry of Defence told the hearing that the soldier had always known there was no guarantee about the length of time he would serve.

The tribunal heard that the "up or out" policy had been agreed by the governments of Nepal, India and the UK in 1947 and was aimed at freeing space for new Gurkha recruits.

Mr Gauchan's commanding officer Colonel Russell Beattie said that while he did not doubt his commitment, Lieutenant Gauchan had been a "very marginal candidate" for promotion to captain.

In the report issued on Friday, chairman Brian Mitchell said: "He is genuinely and reasonably aggrieved that his service has been brought to an end prematurely for reasons entirely outside his control."

He said the policy was "historically understandable" but should now be looked at by the three governments involved.